By Mark Field, Associate Director – Property Risk Engineering and Neil Gunn, Head of Flood & Water Risk Research from WTW
To help you mitigate the potential damage and obtain the right insurance coverage, below we look at proactive strategies and practical measures in the face of both river and surface water flooding.
We also explore how you can prepare if you can’t reduce your flood risk any further, assess how far your insurance is fit-for-purpose and suggest some additional insurance options.
Your three-step flood risk autumn action plan
The first steps to get ahead of your flood risks are:
Step 1 – Check if your property or business is at risk of flooding by visiting the Environment Agency’s webpage to check your long-term flood risk, carrying out more detailed assessments if you’re deemed at risk. You can contact the local Environment Agency office for rivers and coastal risks information or your lead local flood authority for surface water flooding insight.
Step 2 – Register for free flood warning, which provides alerts of river or coastal flooding via texts, calls or emails to designated individuals (noting that this service doesn’t warn of surface water flooding).
Step 3 – Design a flood plan clearly outlining the necessary actions before, during and after a flood, detailing the specific steps to safeguard people, property and critical infrastructure. You should develop, test and exercise your flood plan with the same attention to detail as your fire safety plan, considering the following:
Designation of responsibilities: Assign roles and tasks to individuals or teams, ensuring you’re clear on who’s responsible and what actions they should take during a flood. Remember to specify coverage for weekends and holidays, guaranteeing your people uphold their responsibilities continuously, regardless of the day.
Risk assessment: Identify areas at risk of flooding and the potential impact on the business, considering the effect of flooding on key suppliers or clients as appropriate.
Preventive measures: Outline actions to minimise flood damage, including simple tasks, such as cleaning leaves from drainage to allow water to recede, to more significant measures, such as installing flood barriers and relocating critical equipment to above likely flood levels before warnings are issued.
Communication plans: Establish a communication strategy to keep your employees, customers and stakeholders informed before, during and after a flood.
Evacuation procedures: Detail the steps for safely evacuating the premises if necessary.
Recovery plan: Outline the process for returning to normal operations after a flood, including cleanup and repair plans and dealing with insurance claims.
By adhering to a well-designed and tested flood plan, you can significantly mitigate the risk of damage. Taking proactive measures won’t only protect your assets and business but also help you secure more favourable insurance terms.
What can you do when you can’t eliminate or reduce your flood exposure?
Business continuity and incident management plans are essential to effectively respond to and recover from flooding events and can help you minimise disruption to operations.
During a flood, a well-developed incident management response plan can help to quickly and effectively safeguard your infrastructure, maintain critical operations and manage communications among all interested parties.
Post-flood, your focus will shift to recovery and resuming full operations. Your business continuity plan should detail the recovery strategies developed by the business for each of the five main loss types: loss of premises, people, equipment, IT applications and suppliers. With predefined recovery strategies, you can expect to reduce downtime, manage financial impact and ensure a swifter return to business as usual.
Is your coverage fit for purpose?
Your property damage and business interruption insurance policies should provide coverage for the peril of a flood. However, you should check the following to make sure you have the coverage the business needs and expects:
Limit of liability, including inner sub-limits for flood, levels of cover and basis of limit – is your limit set in terms of a single occurrence of flooding or an aggregate of events?
Excesses or deductibles applying to flood
72 hour or occurrence clauses – flood is sometimes included in these clauses, however, as it’s difficult to determine the start and finish of flood damage, this could lead to potentially multiple excesses or deductibles applying
How ‘flood’ is defined by your policy to ensure your flood risk exposures are covered
Preventative insurance extensions and alternative risk transfer options for flood risk
As the name suggests, insurance extensions can support you in reinstating property damaged by flooding and preventing reoccurring losses in the future by offering certain enhancements to standard policy coverage.
Meanwhile, parametric insurance can complement traditional insurance by covering gaps left by traditional policies, perhaps where certain types of risk are not covered, or where higher excesses or lower limits apply.
The above options, together with robust incident management and business continuity plans, not only can help you manage the immediate effects of a flood but also facilitate a structured recovery process.
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